Readers of this blog may recall a Freedom of Information request to the Taoiseach and the Minister for Finance for details of the discussion between the Government and the EU Commission relating to the price at which Irish bank assets would transfer into NAMA. That information was never furnished.
It is no surprise, therefore that NAMA has claimed exemption from complying with any Freedom of Information requests.
There is a possibility for some information leakage, however. J K Galbraith records, of German hyperinflation of the early 1920s, in Money: Whence it Came, Where it Went, (A. Deutsch, London, 1975, p. 157):-

“’Zero stroke’ or ‘cipher stroke’ is the name created by German physicians for a prevelent nervous malady brought about by the present fantastic currency figures. Scores of cases of the ‘stroke’ are reported among men and women of all classes, who have been prostrated by their efforts to figure in thousands of millions. Many of these persons apparently are normal except for a desire to write endless rows of ciphers.”

“Ciphers”, here, are zeros.
Now, if we camp outside NAMA HQ, we can check for sick people staggering from the office and possibly relate the number of the sick to the destruction of the Irish economy.

Michael O’Leary, presumably, finally sought or was given proper legal advice. We can presume this from his craven back-pedaling we saw in the last few days.
He firstly refused to comply with Ryanair’s obligations, to compensate his customers for cancelled flights, under Council Regulation 261/2004, stating his obligations in terms of contract obligations only.
The next day he, cack-handedly said Ryanair would meet its obligations. He was cack-handed because the manner in which he made the concession was misleading; it suggested he had not changed his position and that customers were not entitled to any of the benefits he should have given to them.
If it were not for the fact that he referred to the Regulation obligations as “absurd” one would think he did not know of the Regulation, but he clearly did. What, then, changed his mind? What did he not know?
Despite the shameful failure of the Irish Government to introduce the possibility of conducting “class actions” in Ireland, O’Leary may have finally realized that he was going to be plunged into class actions in the UK.
Without exception, Ryanair travelers are “consumers” under EU law. Consequently, they are entitled to litigate disputes with Ryanair in the consumer’s place of residence.
Many of Ryanair’s customers were UK residents; they were going to issue proceedings in the UK. There, they could, and surely would, band together and litigate their claims as a class action. By this means they would off-set the advantage of size that Ryanair has over any single consumer, a circumstance perpetuated in Ireland by the sullen laziness of successive Irish Governments. (All that is required is to amend the Rules of the Superior Courts; something the Minister for Justice etc. could do in a flash).
As a measure of the power and benefit consumers would get from a class action, O’Leary folded just at the possibility of being at the receiving end of one, not waiting to find out what the experience would be like, an experience Brian Cowen will deny to Irish consumers even as he is driven from office.

Remarkably, the builder of the Courts of Justice in the Strand, in London, became insolvent during and as a consequence of the work.
Many Irish builders are now becoming insolvent. That’s inevitable in circumstances where their employers, developers, are now insolvent and heading into NAMA.
Whatever the reason, this kind of difficulty is endemic for builders. In Marlborough v Strong [1721] 1 Bro. (P.C.) 175 the builder of Blenheim Palace was shortchanged by the Duke of Marlborough to the tune of £7,300 (an enormous sum).
The Duke refused to pay the shortfall on the grounds that his alleged agent, the Earl of Godolphin was not his agent. In fact the Duke had engaged the services of the Earl precisely to act for him in relation to the building; to employ people (including the architect, Sir John Vanbrough); and to enter contracts for the purpose. The Duke claimed that the Earl was acting as Lord High Treasurer of England and not as his private personal agent. The court thought otherwise and gave judgment for the builders.
(The Duke resembled some of Ireland’s developers; the Duchess reported him as not bothering, on one occasion, to remove his high riding boots in going to the task of “pleasuring” her.)

Our offices are, almost, in Lower Bridge Street and I travel down Clanbrassil Street daily to get to them. It is an ironic occasion every morning for me to join the single lane of traffic traveling north on Patrick Street in front of St. Patrick’s cathedral. Until recently there were two lanes for the north-bound traffic; now, one is a dedicated bus lane.

In 1953, Dublin Corporation determined to ensure that traffic would not be hindered by narrow streets like Clanbrassil Street and Patrick Street. They should be widened, it felt. The Corporation persisted in this feeling from 1953 to 1989 when it finally built a “dual-carriageway” along [some of] Clanbrassil St. and on into Patrick Street.

The fact that the planned Compulsory Purchase Order, to implement this, undermined the values of the properties along the west side of Clanbrassil Street and Patrick Street, from 1953 onwards, is neither here nor there.

What is of moment is this: we no longer care about traffic, that is, the private motor car. We have changed our viewpoint. We cheerfully squeeze it daily into a narrow traffic lane in Patrick Street. That’s not the only change. Dublin Corporation is now Dublin City Council: it hasn’t gone away and it is still an institution of vision.

Currently, it has a vision for a waste incinerator in Ringsend. Perhaps we need such a thing. But will we always? Will we always think it a good thing to burn rubbish? To burn it within the city?

The answer is yes, because the operator of the proposed incinerator will compel us to do it, under the terms of a contract signed by it and Dublin City Council.

Peculiarly, the property rights in rubbish may be more easily defended than the property rights in buildings.

It is a surprising fact that most contracts are concluded without reference to lawyers. It is surprising because of the extent of the law of contract and the effect of getting something wrong in the conclusion of the contract.

Contract law is an essential element of the world of commerce. Buying and selling things is what contract law is about. So, too, is the provision of services.

Most contracts are for small items and small sums; our transactions as we buy our groceries are typical. We do not expect to have to enter written contracts for these items, and we don’t. Nevertheless, these sales are subject to ascertainable conditions and terms, nowadays often emanating from the European Parliament.

If the Government decides to build substantial roadways across the landscape it will, of necessity, enter a contract, or contracts, to achieve that objective; the alternative would be to establish a national workforce in the employment of the State to directly build the roadways. We don’t do that.

Signing a contract for a new roadway (or a new building) is a significant matter. The contract will have to provide for a great number of things, not least the specification for the type or quality of road or building.

A lawyer should not be far removed from this occasion. After all, who drafted the contract? It should have been a lawyer. What if the written terms contain an ambiguity? There is a standard method, or rule, for dealing with that; the contract is interpreted against the person who drafted it.

There is another practical approach; use a standard form of contract. The benefits of such a form are enormous. Any ambiguities will have been eliminated, and the experience of predecessors will have been built into the contract with clauses providing for all the issues and matters that need to be addressed or provided for.

However, these large contracts will often have special conditions to be inserted into them; the facts will require it. It is a general rule that special conditions override general conditions where there is a conflict between them. In that case there is an unavoidable need for a lawyer.

In the construction industry many contracts commence as a consequence of the conclusion of the main contract. The contractor will, of necessity, have to source the skills required to do some of the work, possibly most of it, from specialist sub-contractors. Because of the time consumed in finding the sub-contractors, there may be exchanges of letters of intent or such like. Astonishingly, the result may be that there is no contract between the contractor and the sub-contractor. If the sub-contractor does work in such circumstances, it will still be entitled to be paid. The claim will be in quasi-contract on a “quantum meruit” basis. The work will be valued at market rates and a profit element will then be added. That is what the sub-contractor will be entitled to.

For the contractor, this may be a severe blow. Claims of delay, if any, (there will be such) and consequential, loss will not be enforceable by the contractor.

In construction contracts the payment of liquidated damages is a benefit to the parties. Depending on the circumstances it can benefit the developer by relieving it of the obligation to prove a loss, whereas it can generally benefit the contractor in relieving it from the necessity to resist a [valid] claim and also introduces certainty as to consequences of the contractor’s default. Both parties can avoid expensive disputes in the courts with consequent delay for the project.

However, it is not a carte blanche for the contractor to neglect its obligations in terms of time, say.

In Bath and North East Somerset District Council -v- Mowlem Plc [2004] CA, Mowlem refused to follow an architect’s instruction. The developer council advised Mowlem that if it persisted in its refusal the council would engage another contractor to do the work. Mowlem again refused to do the work and the council instructed another contractor on the matter whereupon Mowlem refused to allow the replacement contractor on the site to do the work.

The council applied for an injunction to effect entry for the replacement contractor. Mowlem, in resisting the application, claimed that the only loss accruing to the council was a loss of time and that was capable of being remedied under the terms of the contract, which fixed liquidated damages for the delay.

The court disagreed and stated:

Mowlem is not entitled to breach its contract. The agreement on liquidated and ascertained damages is not an agreed price to permit Mowlem to do so, and it does not preclude the court granting any other relief that may be appropriate. In my view, the Council’s case is right in principle.”

There was evidence to show that the council’s loss would exceed the liquidated damages and the court affirmed the injunction granted in first instance to the council.

It seems my post on bidding for public contracts in the construction industry missed one element – bid-rigging. See HERE.

Apropos cost overruns, it is interesting to note HERE that when Siemens hits a delay on a project in China and, elsewhere, defects on a project in Budapest it suffers a loss of €200 million, but when roads cost more in the UK the taxpayer takes the loss. Who, in the name of goodness, does the UK Roads Authority use to write its contracts?

Should we not ask our Irish ambassador in China to procure a copy of the Siemens contract and urgently check with the National Roads Authority for an assurance that their contract writer is not the same one as used by the UK Highways Agency?

I have written (HERE) of the need for speed in challenging the award of a public contract where the provisions of the Regulations governing such contracts have not been followed. (European Communities (Award of Public Authorities’ Contracts) Regulations 2006 (Statutory Instrument No. 329 of 2006) ).

The Regulations expressly embody a good idea; that the nation get the best value for money. It is not easy to ensure this.

For instance, one assumes the contract for the “regeneration�? of Ballymun was awarded on the criteria adopted in the 2006 Regulations (not pursuant to them; they post-date the Ballymun contract).

We now see (HERE) that the Ballymun contract is €500 million over budget.
Who can now say that the seemingly more expensive underbidder was not in fact the cheaper of the bids? (Assuming there was an underbidder).

The problem is endemic in such contracts (especially in IT contracts).

In truth, neither the contractors nor the public authorities seeking tenders genuinely know what the costs of such projects are; the tenders are guesses.

The man who built the Empire State building in New York was asked what the most important element was in the construction; he replied, “getting the contract�?.

Following that line of thought, the best guess is the one that seeks, not to estimate the actual cost of the project, but to guess the cost projection of the public authority for the project. That will secure the contract.

It is possible to try and ensure that the cost overruns do not fall to the account of the public, but that, too, seems to be hard to avoid as we see in the Metronet debacle HERE and HERE.

What Transport for London seemed to have overlooked was the freedom of the individual members of the Metronet consortium to become sub-contractors (they gave the contracts to themselves) When Metronet went into administration, Transport for London continued answerable for the claims of those sub-contractors.

It is an important element in the negotiation of such contracts to ensure, to the greatest extent possible, that there will be no re-negotiation of the contract later. The World Bank has this to say on the matter:

8.3.1Avoiding renegotiations
According to one study,55 percent ofwater concessions awarded in Latin America were renegotiated in the 1990s,many within two years ofthe award (Guasch 2004). In some cases, the operator or contracting authority may reasonably refuse to renegotiate.Moreover,developing a reputation for being hard-nosed could reduce the likelihood that the contracting authority will be exposed to opportunistic behavior in the future. In other cases,circumstances may have changed in ways that mean the current arrangements are no longer appropriate,and renegotiation can help both parties.
Often,both the contracting authority and the operator have strong incentives to renegotiate rather than terminate the arrangement:contracting authorities are often concerned that terminating the arrangement may result in an interruption to key services,while operators do not want to lose any past investment or future profit. Yet renegotiation changes a previously agreed arrangement.The contracting authority or the operator may try to renegotiate in order to reduce its risk exposure or to gain advantages it was unable to obtain in the initial agreement (Box 8.1).When the operator is selected based on the lowest tariff bid or highest concession payment,operators may engage in aggressive bidding strategies (lowballing) to win the contract and then seek to renegotiate for more favorable terms once competitive pressure is no longer an effective constraint.

Modern governments have phenomenal spending power. Like a householder, they need to engage tradesmen and professionals of various types to do work the State needs done.

You want a new motorway? Here is a company to build it. You want a new harbour? Here is a company to dig it. You want a contract drafted for the motorway construction to secure your interests and ensure you get value for money? Here is the solicitor to write it for you.

These contracts are very valuable. They allow the person to whom the contract is awarded to, at the very least, pay the wages of the staff of the successful tendering company, say, during slack industry trading periods.

They also represent opportunities for pork-barrel politics. The politician who formulates and guides the policy resulting in the decision to have a motorway in the first place and then the decision as to who will get the contract, wields enormous power. The exercise of that power can secure re-election by the votes of grateful beneficiaries or the money to win those votes in an election.

Clearly, they represent opportunities for criminal activity in the form of fraud and corruption.

That aside, the State, as a major economic engine, can “distort�? the free market in goods and services. The European Union is professedly wedded to ensuring such markets, as are of a minimum size, will be free.

Consequently, EU member states are obliged to adjust their national law to conform to Directive 2004/18/EC intended to ensure only economic considerations (broadly defined) are the determining factor in the awarding of those public contracts which reach the threshold limit.

(HERE is a reference to an Irish-related case dealing with the obligation to advertise (or not!), that the contract is available.)

Ireland passed European Communities (Award of Public Authorities’ Contracts) Regulations 2006 (Statutory Instrument No. 329 of 2006) to comply with its EU obligations in this regard.

The Regulations are legally binding on the awarding authority. In Chapter 3 there is set out the basis for the awarding of the contracts:

Criteria for the award of a public contract

66. (1) A contracting authority shall, in awarding a public contract on the basis of the tender that is most economically advantageous to it, adopt criteria linked to the subject matter of the contract.

(2) Except as provided by paragraph (1), a contracting authority shall award a public contract on the basis of the lowest price.

(3) For the purpose of paragraph (1), the criteria may include (but are not limited to)―
· quality,
· price,
· technical merit,
· aesthetic and functional characteristics,
· environmental characteristics,
· running costs,
· cost-effectiveness,
· after-sales service and technical assistance, and
· delivery date and delivery period or period of completion.

(4) The contracting authority shall specify in the relevant contract notice or contract documents or, in the case of a competitive dialogue, in the relevant descriptive document, the relative weighting that it gives to each of the criteria chosen to determine the most economically advantageous tender. That weighting can be expressed by providing for a range within an appropriate maximum spread.

If an unsuccessful party wishes to challenge the legality of the award of a public procurement contract it is necessary to do so as quickly as possible.
Failure to act swiftly will preclude the applicant from relief. (See HERE).